BCRX: BioCryst Pharmaceuticals Analysis and Research Report

2018-07-30 - by Asif , Contributing Analyst - 96 views

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BioCryst Pharmaceuticals is a biotechnology company that designs, optimizes and develops novel small molecule drugs that block key enzymes involved in the pathogenesis of diseases. The company focus on oral treatments for rare diseases in which significant unmet medical needs exist and that align with its capabilities and expertise. The company integrate the disciplines of biology, crystallography, medicinal chemistry and computer modeling to discover and develop small molecule pharmaceuticals through the process known as structure-guided drug design.

Recent Corporate Highlights


Peramivir (i.e., product sold or marketed under the RAPIVAB, ALPIVAB, RAPIACTA, and PERAMIFLU trade names) is approved for commercial sale in the United States, Canada, Japan, Taiwan, Korea, Australia and the European Union. Peramivir is indicated for the treatment of acute uncomplicated influenza in patients who have been symptomatic for no more than two days.

In April 2018, peramivir was approved in Australia and the European Union. The European Medicines Agency (“EMA”) approval of ALPIVAB under the centralized licensing procedure provides marketing authorization for all 28-member states of the European Union, Norway and Iceland. The company and Seqirus are engaged in a formal dispute resolution process involving many items under the contract including, but not limited to, the EMA approval milestone of $5.0 million, which the company maintain is due.


BCX7353 is a second generation hereditary angioedema (“HAE”) compound and its lead molecule that is being developed as a once-daily (“QD”) oral therapy for the prevention of HAE attacks (prophylaxis), as well as an acute therapy for HAE attacks. BioCryst Pharmaceuticals has recently completed its Phase 2 prophylaxis program (with the completion of APeX-1 and subsequent FDA and EMA regulatory interactions) and have initiated APeX-2 and APeX-S, a Phase 3 and a long-term safety clinical trial, respectively, required for marketing authorization in the United States and Europe. Site initiation, patient enrollment and dosing have begun in both of these clinical trials. In addition, an adaptive dose-ranging proof of concept clinical trial evaluating efficacy, safety and tolerability for the treatment of acute angioedema attacks, ZENITH-1, is enrolling patients and is ongoing.

APeX-2 Trial: On March 15, 2018, the company announced the dosing of the first patient into APeX-2, a Phase 3 clinical trial evaluating two dosage strengths of BCX7353 administered orally once-daily as a preventive treatment to reduce the frequency of attacks in patients with HAE. APeX-2 is a randomized, double-blind, placebo-controlled, three-arm trial testing two doses of BCX7353 (110 mg and 150 mg) for prevention of angioedema attacks. The trial is expected to enroll approximately 100 patients with Type I and II HAE in the United States, Canada and Europe. The primary efficacy endpoint of APeX-2 is the rate of angioedema attacks over 24 weeks of study drug administration.

APeX-S Trial: On February 28, 2018, BioCryst announced the dosing of the first patient in APeX-S, a long-term safety trial evaluating two dosage strengths of BCX7353 administered orally once-daily as a preventive treatment in patients with HAE. APeX-S is an open label two-arm trial to evaluate the safety of two dose levels of BCX7353 (110 mg once daily and 150 mg once daily) over 48 weeks in patients with Type I and II HAE. The trial will enroll approximately 160 patients.

ZENITH-1 Trial: On August 2, 2017, the company announced the dosing of the first subject into ZENITH-1, a clinical trial studying up to three dosage strengths of a liquid formulation of BCX7353 given as a single oral dose for the acute treatment of angioedema attacks in patients with HAE. ZENITH-1 is a randomized, double-blind, placebo-controlled, adaptive dose-ranging trial of the efficacy, safety and tolerability of BCX7353 for treatment of acute angioedema attacks, and will enroll up to 60 subjects with HAE. Blinded study drug is being dosed as an oral liquid after onset of symptoms, for up to 3 attacks in each subject, with each subject receiving both BCX7353 (for 2 attacks) and placebo (for one attack) in a randomized sequence. The trial is structured with up to 3 consecutive cohorts testing single doses of 750 mg (36 subjects), 500 mg (up to 12 subjects) and 250 mg (up to 12 subjects), starting with 750 mg. Efficacy assessments include patient-reported composite visual analogue scale (“VAS”) scores, patient global assessment, change in symptoms, and use of rescue medication. Treatment effect will be assessed by comparing the proportion of BCX7353-treated and placebo-treated attacks that have a stable or improved composite VAS at 4 hours post dose. Enrollment has gone well with the trial thus far, and BioCryst Pharmaceuticals has completed enrollment in the 750 mg and 500 mg cohorts and have begun enrolling patients in the 250 mg cohort.

Liquidity and Capital Resources

Cash expenditures have exceeded revenues since its inception and the company expect its 2018 operating expenses to exceed its 2018 revenues. The company's operations have principally been funded through public offerings and private placements of equity securities; cash from collaborative and other research and development agreements, including U.S. Government contracts for RAPIVAB and galidesivir; and to a lesser extent, the PhaRMA Notes financing and the its $23.0 million Senior Credit Facility with an affiliate of MidCap Financial Services, LLC, as administrative agent (the “Senior Credit Facility”). To date, BioCryst Pharmaceuticals has been awarded a BARDA/HHS RAPIVAB development contract totaling $234.8 million, which expired on June 30, 2014, a NIAID/HHS galidesivir development contract totaling $39.5 million, which is ongoing, and a BARDA/HHS galidesivir development contract totaling $39.1 million, which is also ongoing. The total amount of NIAID/HHS and BARDA/HHS galidesivir funding obligated under awarded options is $39.5 million and $20.6 million, respectively. The company may issue securities through private placement transactions or registered public offerings pursuant to a registration statement filed with the SEC. In addition to the above, BioCryst Pharmaceuticals has received funding from other sources, including other collaborative and other research and development agreements; government grants; equipment lease financing; facility leases; research grants; and interest income on its investments.

As of March 31, 2018, the company had net working capital of $28.8 million, a decrease of approximately $21.7 million from $50.6 million at December 31, 2017. The decrease in working capital was principally due to its normal operating expenses associated with the development of its product candidates and costs incurred for the proposed merger with Idera. The company's principal sources of liquidity at March 31, 2018 were approximately $43.8 million in cash and cash equivalents, approximately $89.1 million in investments considered available-for-sale, and approximately $1.0 million in U.S. Government receivables. The company anticipate its cash and investments will fund its operations at least through the third quarter of 2019.

The company intend to contain costs and cash flow requirements by closely managing its third party costs and headcount, leasing scientific equipment and facilities, contracting with other parties to conduct certain research and development projects and using consultants. The company expect to incur additional expenses, potentially resulting in significant losses, as the company continue to pursue its research and development activities and begin to build a commercial infrastructure. The company may incur additional expenses related to the filing, prosecution, maintenance, defense and enforcement of patent and other intellectual property claims and additional regulatory costs as its clinical programs advance through later stages of development. The objective of its investment policy is to ensure the safety and preservation of invested funds, as well as maintaining liquidity sufficient to meet cash flow requirements. The company place its excess cash with high credit quality financial institutions, commercial companies, and government agencies in order to limit the amount of its credit exposure. BioCryst Pharmaceuticals has not realized any significant losses on its investments.

The company plan to finance its needs principally from the following:

  • lease or loan financing and future public or private equity financing;
  • existing capital resources and interest earned on that capital;
  • payments under existing and executing new contracts with the U.S. Government; and
  • payments under collaborative and licensing agreements with corporate partners.

As its programs continue to advance, its costs will increase. The company's current and planned clinical trials, plus the related development, manufacturing, regulatory approval process requirements and additional personnel resources and testing required for the continuing development of its product candidates will consume significant capital resources and will increase its expenses. The company's expenses, revenues and cash utilization rate could vary significantly depending on many factors, including its ability to raise additional capital, the development progress of its collaborative agreements for its product candidates, the amount and timing of funding the company receive from existing U.S. Government contracts for galidesivir, the amount of funding or assistance, if any, the company receive from new U.S. Government contracts or other new partnerships with third parties for the development and or commercialization of its product candidates, the progress and results of its current and proposed clinical trials for its most advanced product candidates, the progress made in the manufacturing of its lead product candidates and the progression of its other programs.

With the funds available at March 31, 2018, the company believe these resources will be sufficient to fund its operations at least through the third quarter of 2019. BioCryst Pharmaceuticals has sustained operating losses for the majority of its corporate history and expect that its 2018 expenses will exceed its 2018 revenues. The company expect to continue to incur operating losses and negative cash flows until revenues reach a level sufficient to support ongoing operations. Accordingly, its planned operations raise doubt about its ability to continue as a going concern beyond the third quarter of 2019. The company's liquidity needs will be largely determined by the success of operations in regards to the progression of its product candidates in the future. The company also may consider other plans to fund operations beyond the third quarter of 2019 including: (1) securing or increasing U.S. Government funding of its programs, including obtaining procurement contracts; (2) out-licensing rights to certain of its products or product candidates, pursuant to which the company would receive cash milestones; (3) raising additional capital through equity or debt financings or from other sources; (4) obtaining additional product candidate regulatory approvals, which would generate revenue, milestones and cash flow; (5) reducing spending on one or more research and development programs, including by discontinuing development; and/or (6) restructuring operations to change its overhead structure. The company may issue securities, including common stock, preferred stock, depositary shares, stock purchase contracts, warrants and units, through private placement transactions or registered public offerings. The company's future liquidity needs, and ability to address those needs, will largely be determined by the success of its product candidates and key development and regulatory events and its decisions in the future.

The company's long-term capital requirements and the adequacy of its available funds will depend upon many factors, including:

  • ability to perform under its government contracts and receive reimbursement and to receive stockpiling procurement contracts;        
  • the magnitude of work under its government contracts;                 
  • the progress and magnitude of its research, drug discovery and development programs;                 
  • changes in existing collaborative relationships or government contracts;                 
  • ability to establish additional collaborative relationships with academic institutions, biotechnology or pharmaceutical companies and governmental agencies or other third parties;                 
  • the extent to which its partners, including governmental agencies, will share in the costs associated with the development of its programs or run the development programs themselves;                 
  • ability to negotiate favorable development and marketing strategic alliances for certain product candidates or a decision to build or expand internal development and commercial capabilities;                 
  • successful commercialization of marketed products by either it or a partner;         the scope and results of preclinical studies and clinical trials to identify and develop product candidates;        
  • ability to engage sites and enroll subjects in its clinical trials;        
  • the scope of manufacturing of its product candidates to support its preclinical research and clinical trials;        
  • increases in personnel and related costs to support the development and commercialization of its product candidates;        
  • the scope of manufacturing of its drug substance and product candidates required for future new drug application (“NDA”) filings;        
  • competitive and technological advances;        
  • the time and costs involved in obtaining regulatory approvals;         
  • post-approval commitments for RAPIVAB and other products that receive regulatory approval; and        
  • the costs involved in all aspects of intellectual property strategy and protection including the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims.        

The company expect that the company will be required to raise additional capital to complete the development and commercialization of its current product candidates and the company may seek to raise capital in the future. Additional funding, whether through additional sales of equity or debt securities, collaborative or other arrangements with corporate partners or from other sources, including governmental agencies in general and existing government contracts specifically, may not be available when needed or on terms acceptable to it. The issuance of preferred or common stock or convertible securities, with terms and prices significantly more favorable than those of the currently outstanding common stock, could have the effect of diluting or adversely affecting the holdings or rights of its existing stockholders. In addition, collaborative arrangements may require it to transfer certain material rights to such corporate partners. Insufficient funds may require it to delay, scale back or eliminate certain of its research and development programs. The company's future working capital requirements, including the need for additional working capital, will be largely determined by the advancement of its portfolio of product candidates as well as rate of reimbursement by U.S. Government agencies of its galidesivir expenses and any future decisions regarding the future of the RAPIVAB and galidesivir programs, including those relating to stockpiling procurement. More specifically, its working capital requirements will be dependent on the number, magnitude, scope and timing of its development programs; regulatory approval of its product candidates; obtaining funding from collaborative partners; the cost, timing and outcome of regulatory reviews, regulatory investigations, and changes in regulatory requirements; the costs of obtaining patent protection for its product candidates; the timing and terms of business development activities; the rate of technological advances relevant to its operations; the efficiency of manufacturing processes developed on its behalf by third parties; and the level of required administrative support for its daily operations.

The restrictive covenants contained in the Senior Credit Facility could cause it to be unable to pursue business opportunities that the company or its stockholders may consider beneficial without the lender’s permission or without repaying all Senior Credit Facility obligations. These covenants limit its ability to, among other things, convey, sell, lease, license, transfer or otherwise dispose of certain parts of its business or property; change the nature of its business; liquidate or dissolve; enter into certain change in control or acquisition transactions; incur or assume certain debt; grant certain types of liens on its assets; modify, liquidate or transfer assets in certain collateral accounts; pay dividends or make certain distributions to its stockholders; make certain investments; enter into material transactions with affiliates; and modify existing debt or collaboration arrangements. A breach of any of these covenants could result in an event of default under the Senior Credit Facility.

Based upon its development plans and its awarded government contracts, on a stand-alone basis, the company continue to expect 2018 operating cash usage to be in the range of $67 to $90 million, and expect its total 2018 operating expenses to be in the range of $85 to $110 million. With merger-related costs and the aggressive advancement of programs thus far, the company expect to be in the upper-end of both ranges. The company's operating expense range excludes equity-based compensation expense due to the difficulty in accurately projecting this expense as it is significantly impacted by the volatility and price of the Company’s stock, as well as vesting of the Company’s outstanding performance-based stock options. The company's operating cash forecast excludes any impact of its royalty monetization, hedge collateral posted or returned, and any other non-routine cash outflows or inflows. The company's ability to remain within its operating expense and operating cash target ranges is subject to multiple factors, including unanticipated or additional general development and administrative costs and other factors described under the Risk Factors located elsewhere in this report.


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